Guide To Avoiding Fraud In Sales of Vacant Land

Guide To Avoiding Fraud In Sales of Vacant or Unimproved Land

Subsequent to the issuance of Bulletin No. 174, the issues of fraud rising in sales of vacant or unimproved land, have dramatically increased. As a result, additional steps must be taken to protect you, as our Agent, the Company, and our Insureds. In the last few weeks, we have seen no less than five (5) attempted fraudulent transactions involving the sale of vacant/unimproved land. As a result, to protect the Company, and to protect you our Agent, we now must mandate the requirements set forth below when you are dealing with the insurance of vacant or unimproved land. We note that the new requirements should not cause a major disruption in your production, as the number of transactions to which these requirements will apply, should not be significant.

Underwriting Guidance. Which type of sales of vacant or unimproved land will be subject to the requirements? If you are insuring property that is either unimproved or vacant, is unencumbered by a mortgage, and where the seller will not be present at the closing you must take the following steps:

  1. You must send a Notice of Pending Real Estate Transaction letter to the seller via Certified Mail Return Receipt asking the seller to confirm by signing the letter that the seller is in fact selling then property you are insuring. The address that must be used for the seller must be the address set forth in the present owner deed and as set forth in the tax search. Also, you must have in your possession, before closing, the green card signed by seller which evidence receipt of the Letter and five (5) days must have elapsed since receipt of the green card in order to allow for the seller to respond.
  2. You as settlement agent, must confirm that in any sales of vacant or unimproved land a deed was acknowledged by an attorney or notary in good standing in the jurisdiction in which the acknowledgement was taken. New Jersey attorneys can be searched here; New York attorneys can be searched here; Pennsylvania attorneys can be searched here; in the case of attorneys from jurisdictions other than New York, New Jersey, or Pennsylvania you must contact the State Bar Association to ascertain the attorney’s status. Non-attorney notaries can be searched here for New Jersey, here for New York, and here for Pennsylvania. For all other jurisdictions you must contact the respective state to ascertain the notary’s status.
  3. Once you have located the attorney or the notary (regardless of his or her location) he or she must be contacted to discern what proofs he or she received at the time of the acknowledgement to confirm the identity of the seller. Obtain copies of the proofs, or a copy of the journal entry, and forward same to underwriting counsel for review.
  4. If you are unable to verify the validity of the attorney or notary, or they cannot be contacted, or they do not provide the requisite proofs as set forth above, the settlement agent must re-acknowledge the deed with the seller present and obtain the requisite proofs themselves; or if the seller is out of state, use a Company approved RON platform (Click here) for the purpose of taking the new acknowledgement and comply with the Company guidelines as set forth in Bulletin 160 and further delineated on the flowcharts attached thereto.
  5. In addition to following the requirements set forth herein, you must also follow all, prior guidelines relative to the wiring of funds in the sales of vacant or unimproved land. Following the steps above you should be able to uncover an attempted theft of property. If you believe you are the subject of a fraudulent transaction, including but not limited to a fraudulent transaction involving unimproved or vacant lands you must stop the transaction, notify appropriate law enforcement authorities and contact the State Office immediately.

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